Curling up in bed and watching the television has been a feature of domestic life for decades but it is rapidly being replaced by a new variation: taking the laptop or tablet device into bed with you.

Web access to video content and the expansion in new devices is transforming TV viewing.

A recent presentation by Fox channel in the US showed that among adults aged 18 to 49, 17 per cent viewed a popular sitcom over a legal online streaming service. Streaming provider Netflix has 23 million customers in the US and an additional 3 million in other countries.

A new factor in the equation will be internet-enabled smart TVs, a product that has little penetration so far in Australia. The projections, however, are for a rapid take-up. In internet leading South Korea, for example, the forecast is that smart TVs will make up 47 per cent of the market by as soon as 2015, and 80 per cent of new units being shipped will be smart models.

Until now, game consoles hooked up to the family flat-screen have been the best way of transferring content from the net, but that is largely for aficionados. When the new generation of smart TVs gains traction in Australia, a new home revolution will be under way.

A major enabler in this transformation is cloud storage, which offers new providers the ability to offer seamless streaming content to consumers on whatever device they choose, from their mobile phone to the home flat-screen.

It means that users who are watching a program on TV at home can continue watching it on their phone or tablet as they take the bus on the way to an appointment. It’s a prospect that has some industry analysts predicting the end of subscription-based TV and the older free-to-air TV business.

“The cloud is absolutely front and centre in our business model," says Stephen Langsford, the founder and executive chairman of ASX-listed DVD rental and movie streaming company
Quickflix
.

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Company Profile

Quickflix began as a company offering online DVD and Blu-ray disc rental before launching its streaming service from October 2011, recently going live on iPads, iPhones and the Samsung Galaxy.

The company aims to have its icon configured on home TVs in as many Australian households and possible and become as mainstream as pay TV providers Foxtel or Austar are today.

A $10 million equity stake taken by US production house HBO last year is a key step on the way to achieving that goal, and the company has struck content deals with Sony and MGM.

“Our quest is ultimately the flat-screen at home or the device in your hand on the go," Langsford says.

“We are now making that transition, and in that there is also a transition to be made by Hollywood, which currently derives 80 per cent of its revenue from the physical format of DVD and Blu-ray.

“We started in the business of mailing out DVDs and currently do around 500,000 or 1 million each month," he says.

“But there is no doubt that in 10 years’ time the DVD will be on the way out and streaming will be the fundamental way in which we will be accessing content."

To get to that point, however, requires a transition in the Hollywood business model. Today, a title goes from cinema release to DVD then to streaming, but as technology changes and consumer patterns change with them, more premium content will be available earlier through streaming.

“Streaming is taking off very quickly," says Langsford.

“Already 20 per cent of our clients have opted for streaming and it is rapidly being embraced by our subscribers," he says.

“We are still in the days of a ‘land grab’ if you like, and we are running as fast as we can to promote our Q icon as an interface appearing on as many new devices as possible. So we are becoming a channel like Nine or Seven or Ten."

“In many ways it feels like the beginning of the dotcom thing. And what has been played out in newspapers, with the demise of print, is being played out in a different way in TV land."

None of this, says Langsford, would be possible without the use of cloud storage. The Quickflix model involves accessing content from other providers’ clouds in the US, then delivering that content on demand to customers’ devices in Australia and New Zealand.

“Without the cloud we would be making a multimillion-dollar investment in significant infrastructure to emulate what we are doing now very efficiently," says Langsford.

“Our entire supply chain is facilitated by the cloud. We strike deals with Hollywood, the content is ingested and coded for us out of Los Angeles and then delivered to our customers on their device of choice.

“All our content is sitting in the cloud and is delivered on demand to your screen with minimal caching, so the initialisation time is very quick. Quickflix lives in the cloud but is operating through infrastructure provided by very large global providers."

All this means that Quickflix does not have to maintain its own cloud; instead, the company can spend its time focusing on improving its consumer interface and marketing direct to customers.

“Our initial business was DVD rental, and we are still paying Australia Post for a round trip cost on the shipping of physical DVDs," Langsford says.

“But that cost falls away to single cents in the dollar when we move to a streaming model from the cloud.

“We’ve had great success with game consoles so far, but that will be far surpassed when people start buying smart TVs in Australia.

“Australians have always had a high refresh rate on their televisions, something in the order of 20 per cent per annum, so more and more people are going to be discovering what the internet button on their remote can do," he says.

While companies such as Quickflix are riding the cloud-enabled wave of streaming, industry analysts say that the future has not arrived quite yet, and the demise of pay TV may be slightly exaggerated.

Ovum’s UK-based principal analyst Jonathan Doran says that while there is a weakening in consumer reliance on subscription- based TV, he sees a situation in which people will downgrade and go onto lower packages, and top that up with a streaming service.

Ovum has called on conventional pay TV providers and those offering “over the top" or OTT cloud-based services to collaborate.

“For their mutual benefit we believe it is paramount for operators and OTT players to collaborate, but we have seen little evidence of this to date," says Doran.

He says that while OTT will in the short term still be a complement rather than an alternative to pay TV, the explosion in mobile devices – accessing streaming from the cloud – is having a big cultural impact and changing behaviour.

“The cloud gives the ability to deliver increasingly better quality service and a consistent stream, so there is not so much of a need for local storage," Doran says.

Beyond the TV industry, Doran also sees potential in the development of so-called “private lockers".

This is where consumers will be able to store their movie and music collections in the cloud, rather than physically maintaining them at home.

“I think there will be some resistance to this, but there will be a tipping point at some point," he says.

“Many people maintain huge movie collections. Storage is getting cheaper and people want to access these collections in different locations on different devices.